Daily Report 09 November 2022

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 0.6% lower at the 69 011 level.

Murray & Roberts (M&R) said that they want to sell its full stake in its Australian subsidiary Clough to multinational Italian industrial group Webuild as Clough’s working capital needs has “become increasingly urgent”. The proposed transaction, if concluded, will result in a financial benefit to M&R of about R4 billion. This announcement saw the group’s share price close 17.32% higher on the JSE yesterday at R5.42 per share.

Raubex said they are disappointed to lose the tender award for the R1.8 billion upgrade to the Ashburton interchange in KwaZulu-Natal to a Chinese joint venture company. Raubex CEO Felicia Msiza said that of the four tenders awarded by the South African National Roads Agency (SANRAL) last week, Raubex only submitted a bid for the Ashburton interchange project, but she doubts the activity of the Chinese companies in the local market will negatively impact Raubex’s order book and financial performance in the future.

Yamana Gold Inc. has entered into an arrangement agreement to be bought by Pan American Silver Corp. and sell certain subsidiaries and partnerships to Agnico Eagle Mines Ltd. in a cash and stock deal with a consideration value of $4.8 billion. The Yamana board now unanimously recommends that its shareholders vote against the arrangement with Gold Fields at a shareholder meeting on 21 November. If it does terminate the deal, Yamana would be liable to pay a termination fee of $300 million to Gold Fields.

SA Economy:

South Africa has secured an extra $10 billion from the International Partner Group (IPG) of five nations, which include the UK, the US, Germany, France and the EU, that previously pledged $8.5 billion to support the country’s transition plan from coal to renewable energy. This came after President Cyril Rhamaphosa said during a speech at the COP27 summit that the country needs close to R1.5 trillion to realise its transition goals.

​Global Economy:

The city of Zhengzhou said that the number of COVID cases more than doubled, dashing hopes for an early end of the lockdown that is affecting the world’s largest iPhone assembly plant.

The main focus yesterday was on the US. midterm elections.

China’s Producer Prices Index (PPI) fell 1.3% year-on-year in October 2022 after a 0.9% rise in September. This was the first drop in factory gate prices since December 2020, reflecting weak domestic demand and disruptions to output amid strict COVID curbs as well as falling commodity prices.

China’s annual inflation rate dropped to 2.1% year-on-year in October 2022 from 2.8% in the prior month, compared with market consensus of 2.4%.

Global Company:

The FTSE 100 closed flat at 7 306, with energy companies tracking crude oil lower and miners remained under pressure from Covid-19 outbreaks in China.

The Hang Seng Index is lower by 1.69% to 16 280, heavily weighted tech stocks weakened. Alibaba Group is down 0.3% and Meituan fell 0.9%.

In China, the Shanghai Composite is down 0.5% to 3 049.

Nintendo reported a 34% increase in its first-half net profit due to stronger sales of Switch software and a weaker Yen and raised its full-year earnings guidance.

The Dow Jones Industrial Average rose by 1.02% to 33 160, while the S&P 500 climbed 0.56% to 3 828.

Nvidia said they will offer an alternative chip for China to clear US. export hurdles. The new graphics-processing chip, branded the A800, replaces the A100, a chip widely used in servers and AI applications by Alibaba, Tencent and Baidu.

Commodities:

Gold is up 2.14% to $1 709/oz, while Platinum is higher by 2.11% to $1006/oz.

The price of oil corrected downward after a few days of healthy gains, as developments in China dented hopes for a quick end to the Zero-COVID policy.

Brent crude was 2.04% lower at $95.50 a barrel.

Crypto Currencies:

Bitcoin is down 2.46% to $18 241 after a 10% plunge yesterday. The digital assets market has been rocked by the near collapse of one of the world’s biggest cryptocurrency exchanges, FTX.FTX struck a bailout deal with larger rival Binance after a surge in withdrawals caused a “significant liquidity crunch”. Concerns about FTX’s financial health reportedly triggered $6bn (£5.2bn) of withdrawals in just three days. Binance says it agreed to buy FTX’s non-US unit, pending the due diligence.

Currencies:

The rand traded at R17.75 against the US Dollar, R20.49 against British Pound and R17.86 against the Euro.

The Euro is slightly firmer against the US Dollar to trade at $1.0061.